Yes, I did itemize in 2023 and my total SALT deduction was pretty close to the $10k limit. I think it was around $9,800. Does that mean I should be using Publication 525 instead of the worksheet?

Since you itemized and your SALT deduction was close to but under the $10k limit, you should still check both methods. The worksheet is simpler but Publication 525 will give you the most accurate result if any of the special circumstances apply. Since your SALT was under the cap, the main thing to check would be how much your itemized deductions exceeded the standard deduction. If your itemized deductions were only slightly higher than your standard deduction, and your state refund is larger than that difference, then Publication 525 would likely show that not all of your refund is taxable.

Not OP but I had this exact problem. I itemized in 2022, then took standard deduction in 2023, and got confused about how to handle my state refund in 2024. Publication 525 saved me about $400 in taxes that the worksheet would have had me pay unnecessarily.

Thanks for the detailed response! I did notice our health insurance section on the paystub looks different than it did a few months ago. Do employers have to notify employees when they make these kinds of changes to how benefits are taxed?

Employers should notify employees about changes to benefit taxation, but the requirements vary by state and the type of benefit. For health insurance specifically, they should provide updated plan documents that explain the tax treatment. However, these notices are often buried in annual enrollment materials or benefit updates that employees might overlook. The best approach is to request documentation from HR about any recent changes to benefit tax treatment. Ask specifically about your health insurance premiums and whether they changed from pre-tax to post-tax deductions. If they made this change without proper notification, you might have recourse through your state's labor department depending on your location.

Good point. For 2025, the Social Security wage base (the FICA cap) increased to $168,600, up from $160,200 in 2023. This means employees earning above the previous threshold are now paying Social Security tax on a larger portion of their income.

Thanks for confirming! That makes sense. So higher earners would definitely see more coming out of their checks without any shady business practices being involved. Probably worth checking if all the affected coworkers are earning above that previous threshold.

Thank you - that's really smart advice. Do you think I should communicate with them in writing about this issue so I have a paper trail? I'm worried if I call, they'll just deny everything.

Yes, absolutely communicate in writing - email is perfect for this. Clearly state what specific expenses you've identified as incorrect and ask for an explanation of where that information came from since you didn't provide it. Be professional but direct, and specifically request that they file a withdrawal of the incorrect return immediately. Keep it factual and avoid accusations or emotional language. Something like: "I've reviewed my tax return and found several business expenses listed that I did not incur and did not report to you. For example, [specific examples]. Please explain the source of this information and what steps you'll take to correct this immediately.

You're right - once an e-filed return has been accepted by the IRS, it can't be withdrawn. The proper procedure is filing an amended return (Form 1040-X). You can request a withdrawal only if the original return was rejected or is still in processing. Since OP mentioned their return was already e-filed, they'll need to go the amendment route. This is actually better in some ways because it creates a clear record of self-correction, which can help demonstrate good faith compliance.

Does anyone know if there's a way to import the 1099-NEC directly from providers? Last year my investment company had direct import for my 1099-MISC but I don't see the option for the NEC form.

Some providers do support direct import for 1099-NEC now, but it really depends on your specific broker or payment platform. In TaxAct, when you go to the import section, look for a list of supported providers - they've been expanding the list. My main client uses Gusto for payroll and their 1099-NEC imported automatically, but my smaller clients who use other services didn't have that option yet. If direct import isn't available, you'll just need to enter it manually - it's pretty straightforward once you find the right section.

Does FreeTaxUSA handle multiple state returns too? I do freelance work across 3 different states and that's why I've stuck with TaxAct despite the price increases.

Doesn't TurboTax charge extra for each 1099 form though? I heard it's like $15 per form or something, which adds up quick if you have multiple contractors.

The base package includes 5 forms, and yes, they do charge for additional forms beyond that. It's about $12.99 per additional form last I checked. For a small number of contractors it's reasonable, but you're right that it can add up if you have many. The advantage is that everything integrates with your tax return if you're using TurboTax for that too.

You need to provide 1099-NEC forms to your contractors by January 31, 2025. The same date applies for filing them with the IRS - both are due January 31st, regardless of whether you file electronically or by paper. Missing these deadlines can result in penalties ranging from $50 to $290 per form, depending on how late you file and whether it's considered intentional disregard.